A Libertarian Reacts to ‘What’s A Rigged Economy’, from AJ+

I think Dena Takruri would make a good libertarian.

AJ+ and Now This are the new producers of hip, left-wing minute-news designed for the facebook attention span. It’s a brilliant format from which propagandists of all political stripes could benefit. I don’t really see a whole lot of short, flashy, hip-looking conservative videos ‘splaining the whole one-man, one-woman thing, or how to beat the terrorists with more military boondoggles.

Libertarians have Learn Liberty from the Institute for Humane Studies, but I don’t know if it has quite the same allure. The focus is more on economic theory than current events. Reason.tv produces short videos, but they are often kind of jokey. It’s not quite the same as a sweet, punchy AJ+ video, like the one I saw this morning about our rigged economy. Please watch this video now, and read my libertarian reaction below.

As a libertarian, I sympathize with a lot of this stuff. The video describes a sort of holy trinity of wealth inequality: Wealth → Politicians → Policies. The rich influence politicians with money, and those politicians enact policies that financially benefit the rich. Yes, this is true and correct. This makes sense. The libertarian response to this is: Let’s try to knock the politicians and policies down to the bare minimum.

There will always be rich people. That’s a fact of life. Some people will always have more stuff than other people. Of course, in our present American society this is not necessarily based on merit, but even in a hypothetical society that has been the free and just from the start, some people will be more frugal, more productive, and more entrepreneurial than others. They will be richer, and their children will be richer, than average citizens.

You can’t get rid of rich people. That will never happen—but that doesn’t mean we should all kiss the feet of politicians who promise to cure our woes through interventionist economic policies. After all, isn’t that a part of the problem, according to this video? Politicians make promises. Corporations then write legislation for the politicians and say to them, “Here’s something you can pitch to the public as a cure to some woe, but it kind of actually works for us, too.” Politicians pass the legislation. Progressives cheer. Corporations win. Voila! You have a rigged economy.

Progressives wish the government would work for the middle class and the poor, rather than the rich. Well, there’s an old saying: “Wish in one hand, and poo in the other. See which one gets filled first.” The reality is that governments answer to money and power. Rather than give more power to government, as the progressives seem to want, libertarians resist the monkey’s paw of more interventionist economic policies and instead advocate for knocking those policies out of the rigged economy’s holy trinity.

That’s my general reaction to this video, and really the main point I want to get across with this post, but I can spend a few minutes responding to some of the video’s specific claims.

At about 38 seconds into the video Ms. Takruri explains that CEO pay has risen from 30 times as much as the average worker to 300 times as much. Fair enough, but I learned in a recent episode of Planet Money that CEO pay exploded in the mid-90’s as a result of a Clinton Administration tax code change designed to limit CEO pay and tie CEO pay to company performance. If you don’t believe me, please listen for yourself. If ever there were a lesson to learn about the unintended consequences of interventionist government economic policies, here it is.

At about 55 seconds into the video Ms. Takruri explains that rich people pay a lower rate on capital gains than workers pay on wages. One of the government’s most insidious and infuriating economic interventions, for me, is its campaign of social engineering though selective taxation. It’s not the government’s job to make capital gains a more attractive investment by taxing them less. In markets, there are reasons to work to earn wages and there are reasons to invest in capital. Free people should decide based on their circumstances which is the better income source for them. Politicians should not use the government’s need for revenue as a pretense for bulldozing the citizenry into one income source or the other. I think where Ms. Takruri and I might differ is that, based on her portrayal of the rich as cheapskates who don’t pay “their share”, I think maybe she would like to raise the capital gains tax on the rich, whereas I would rather lower the general tax rate on everyone else. The theory is that money extracted by the government from its citizens at threat of force probably generally isn’t spent as wisely in the citizens’ service as money that the citizens earn and keep for themselves.

Get to know your tax code.

At about 1:13 in the video, Ms. Takruri explains that the complexity of tax code enables the rich to pay accountants to find loopholes for them so they can pay less taxes. Of course, libertarians who oppose taxes generally also hate the complexity of the tax code. These “loopholes” aren’t all accidents. As a variation on the social engineering theme, politicians deliberately write “loopholes” into the tax code either to encourage some behavior or reward some crony. Other times the loopholes are accidental, where politicians can’t fully imagine the future antics of businessmen who will do weird and unexpected things to avoid paying taxes. In any case, I join Ms. Takruri’s criticism of the tax code’s complexity. I favor a simpler tax code.

At about 1:30 in the video, Ms. Takruri explains how the Citizens United decision helps rig the economy by allowing corporations to spend unlimited sums of money on political campaign propaganda while individual donations are capped at $5,000. I don’t lose a whole lot of sleep over Citizens United. I think, more than anything, it reveals an inherent flaw of democracy in general, and that is: Political speech costs money. Wouldn’t it be great if political speech were free? The playing field would then be level and money wouldn’t matter—but that isn’t reality. Reality is that political campaigns cost money, and people with more money can and will produce more political speech. Any government attempt to alter this reality could only result on Orwellian censorship of political speech. The Citizens United case itself, for example, is about a non-profit organization’s documentary about a politician during an election cycle. See how that works? The very thing the whole First Amendment was ratified to protect was censored and banned by government campaign finance laws! I think that result is intolerable. The Supreme Court was right to correct it, and if I were to change anything Ms. Takruri criticized in this segment of the video, I would remove the $5,000 individual cap as well.

If we are to believe progressive criticism against Citizens United, then it reveals a sad truth about democracy: Voters find money more convincing than arguments. What good is democracy if voters vote on the basis of how much money is spent, rather than a convincing analysis of the issues? Try and blame the rich all you want. All you’re really telling me is that the American public is ill-prepared to handle the responsibility of voting. I’d like not to believe that:

For the most part, I would say that libertarians share the frustrations detailed in this video. I think any libertarian could use this video almost as an introduction to libertarianism. The biggest difference I see is that it features Bernie Sanders at the beginning as a kind of oracle on rigged economies. As far as I can tell from Bernie’s campaign, however, he is advocating for more government intervention into health care, education, banking, and the economy generally. It’s hard for me to see how this should be a solution to problems caused by government intervention into health care, education, banking, and the economy generally. Sure, I understand that making certain things free and tax funded could be helpful to some people, but they come at an economic cost beyond the price tag, and I think they could be handled better through less intervention, not more. As Ms. Takruri explains, much intervention really benefits the rich first and foremost.

Ms. Takruri ends her video with a question: So if the economy is rigged in a way where money and politics ultimately serve the super rich, who’s looking out for average Americans? The answer is that average Americans look out for other average Americans. They do so by filling needs and wants through productive entrepreneurial activity. Unrigging the economy entails removing the rich-serving politicians and policies from the trinity of rigged economies, thereby allowing average Americans to serve one another freely of inhibitive policies that benefit the rich.

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This entry was posted on Friday, February 26th, 2016 at 10:15 am and is filed under Bloviation. You can follow any responses to this entry through the RSS 2.0 feed.
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